Sarepta Therapeutics Inc (NASDAQ:SRPT) is up by 16% this morning after the FDA informed the company that it needs additional time to complete the review of the New Drug Application for the company’s eteplirsen, which is an exon-skipping treatment candidate for Duchenne muscular dystrophy. Traders are buying the postponement because it wasn’t a rejection at this point. Many traders feared that the FDA would reject the drug because the briefing doc for eteplirsen highlighted problems related to Sarepta’s Study 201/202 trial, which some believed would render the study’s efficacy conclusion invalid. Apparently the FDA doesn’t feel that way, which increases the likely of the treatment being approved.
Is Sarepta Therapeutics Inc (NASDAQ:SRPT) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. These investors who are in the know are buying Sarepta. The number of long hedge fund bets in the stock rose by 2 in recent months. SRPT was in 19 hedge funds’ portfolios at the end of March. There were 17 hedge funds in our database with SRPT positions at the end of the previous quarter. At the end of this article we will also compare SRPT to other stocks including Infinity Property and Casualty Corp. (NASDAQ:IPCC), NuStar GP Holdings, LLC (NYSE:NSH), and Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) to get a better sense of its popularity.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the largest position in Sarepta Therapeutics Inc (NASDAQ:SRPT). Perceptive Advisors has a $74.8 million position in the stock, comprising 6.6% of its 13F portfolio. The second most bullish fund manager is Steve Cohen of Point72 Asset Management, with a $57.8 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish encompass Ken Griffin’s Citadel Investment Group, Behzad Aghazadeh’s venBio Select Advisor, and Zach Schreiber’s Point State Capital.
On the next page we’ll look at some funds that took up positions in Sarepta during Q1, as well as compare the stock to a handful of others with similar market caps.